Directors of Holland Ltd are considering the purchase of a new machine

The machine will cost $210 000

There will be net cash inflows in each of the three years of:

Year 1: $80 000, Year 2: $90 000 and Year :3 $69 000

The machine is thought to have a residual value of $40 000 at the end of year 3

The required rate of return (RRR) is 12%

1. What is the Total Depreciation?

2. Calculate the Average profit?

3. What is the value of the Average Investment?

4.The Accounting Rate of Return (ARR) for this investment is:

5. Which of the following statements is true regarding the decision rule for ARR?

6. A qualitative feature of investments is: